HONDURAS Trends and Developments Contributed by: Benito Zelaya, Alejandro Cáceres, Juan Carlos Benítez and Luis Ernesto Cruz Gamero, Lexincorp
Arbitration and Conciliation Trends in the Construction and Infrastructure Sector Introduction: the infrastructure landscape and the need for agility The construction sector and the development of large infrastructure projects represent fundamental pillars for economic growth and the attraction of foreign cap- ital. In the execution of these projects, the daily inter- action between contractors, subcontractors, suppli- ers and project owners creates an extremely complex commercial ecosystem. This multiplicity of actors and sectors, combined with high volumes of investment, naturally increases the likelihood of disagreements about the scope, timing or quality of work. Therefore, having predictable and efficient mechanisms in place to resolve these differences is essential for maintain- ing the financial viability of operations. Historically, the parties involved have relied on ordi- nary civil courts to settle their contract disputes. How- ever, traditional court litigation has proven to be largely incompatible with the dynamic nature and strict cash flow demands that characterise this industry. Protract- ed legal proceedings tend to paralyse the physical progress of the works, freezing working capital that is essential for the continuity of the project. This harsh operational reality has prompted companies to active- ly seek more agile alternatives that protect investment and preserve long-term business relationships. In the face of these challenges, alternative dispute resolution methods have evolved from a simple stand- ard clause to a central risk management tool. Concili- ation and arbitration today offer specialised, confiden- tial and significantly faster responses than ordinary jurisdictional channels. For international investors and local developers, properly structuring these resolu- tion paths from the negotiation phase is the first step to ensuring the success of the project. The current market trends show that preventing and managing conflicts through these methods ensures operational continuity and drastically reduces financial losses. Conflict prevention: the rise of tiered clauses Design of multi - level clauses ( direct negotiation , conciliation , arbitration ) There has been a clear trend among investors and pro- ject developers towards the use of multi-tier dispute
resolution clauses. These clauses establish sequen- tial steps for resolving disputes ‒ typically including negotiation, conciliation, mediation, or dispute boards ‒ before ultimately referring the dispute to arbitration. This trend is generally positive. Multi-tier clauses pro- mote early resolution through more efficient, flexible, and commercially oriented mechanisms, allowing par- ties to address disputes in a manner that is tailored to the project. However, their widespread use also creates risks. Poor drafting or ambiguity can delay, or even prevent, effective dispute resolution. For this reason, investors and developers should seek specialist advice when structuring these clauses. A key challenge lies in determining whether pre-arbitral steps are mandatory or optional. A lack of clarity may lead to jurisdictional objections, particularly where one party alleges non- compliance with conditions precedent. It is equally important to define clear timeframes, trig- gering mechanisms, and minimum procedural rules. Open-ended language should be avoided. In infra- structure projects, dispute boards should be carefully integrated with arbitration, ensuring both enforceabil- ity and a clearly defined scope. When properly draft- ed, multi-tier clauses reduce disputes and improve predictability and efficiency in dispute management. Dispute boards : early resolution of technical issues at the project site One of the most significant developments in modern construction contract practice is the growing adop- tion of Dispute Boards (DBs) as a frontline mechanism for preventing and resolving technical conflicts before they escalate into full-scale arbitral proceedings. Orig- inally popularised by FIDIC ( Fédération Internationale Des Ingénieurs - Conseils ) contract forms, particularly the Conditions of Contract for Construction (the “Red Book”), Dispute Boards are standing panels, typi- cally composed of one or three independent experts with combined legal and engineering expertise, who are appointed at the outset of a project and remain engaged throughout its duration. The state contracting law regulates the application and use of Dispute Adjudication/Avoidance Boards (DAABs) in projects valued over HNL1,923,000. The
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